In today’s briefing:
- CATL (3750 HK) H-Share IPO: Fast Entry to Global Indices Is Touch & Go
- [Japan M&A] YAGEO Overbids Minebea’s Overbid of YAGEO’s Overbid of Minebea’s Overbid – The Endgame
- HSTECH Index Rebalance: BYD (1211 HK) To Replace China Literature (772 HK) As Trade Hits US$6bn
- [Japan Buybacks] ¥7.3trln of Buybacks Announced In the Last Month – Data on Each, Plus History
- [Japan M&A/Activism] Toyota Industries (6201) Deal Could Be Announced Near-Term
- HSCEI Index Rebalance: Why Did Pop Mart (9992 HK) Miss?
- Hang Seng Index (HSI) Rebalance: Midea (300 HK) & ZTO Express (2057 HK) Added; Inching Towards a 100
- Toyota Industries (6201 JP): A Potential Privatisation Sooner than Expected
- [Japan M&A] Mitsubishi Logisnext (7105) – The Deal Still Looks Mighty Good
- GMO Internet Placement: Extremely Overvalued at the Moment
CATL (3750 HK) H-Share IPO: Fast Entry to Global Indices Is Touch & Go
- Contemporary Amperex Technology (CATL) (300750 CH) could raise up to US$5.1bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a huge allocation to cornerstone investors that is locked up for 6 months. That significantly reduces float and the probability of Fast Entry inclusion to global indexes.
- CATL (3750 HK) will be added to Southbound Stock Connect from the open of trading on 16 June following the end of the Price Stabilisation period.
[Japan M&A] YAGEO Overbids Minebea’s Overbid of YAGEO’s Overbid of Minebea’s Overbid – The Endgame
- Yageo Corporation (2327 TT) has now strongly overbid Minebea’s weak overbid of Yageo’s strong overbid of Minebea’s weak overbid of Yageo’s initial hostile offer for Shibaura Electronics (6957 JP).
- We are now 40% higher than the initial bid and the best bid is approaching the top end of Valuation Agent’s top-of-DCF-range prices. There may be a bit more. Maybe.
- The question now is only whether Minebea responds. If it does, there is a little juice left, but if not, that’s it. It should get done.
HSTECH Index Rebalance: BYD (1211 HK) To Replace China Literature (772 HK) As Trade Hits US$6bn
- As expected, BYD (1211 HK) will be added to the Hang Seng TECH Index (HSTECH INDEX) in June following the launch of God’s Eye, its Advanced Driver-Assistance System (ADAS).
- BYD (1211 HK)‘s inclusion results in China Literature (772 HK) being deleted from the index. China Literature stock should drop over the near-term.
- Estimated one-way turnover at the rebalance is 13% resulting in a round-trip trade of HK$46.5bn (US$5.95bn). There are 16 stocks that have at least 1x ADV to trade from passives.
[Japan Buybacks] ¥7.3trln of Buybacks Announced In the Last Month – Data on Each, Plus History
- Buybacks are a central part of Corporate Japan’s effort to improve corporate/capital governance. Lots of cross-holders want/need to sell. Lots of companies want to reduce excess equity.
- This earnings season has seen a LOT of new buybacks announced. ¥7.3trln in the last month and that doesn’t even include the biggest buybacks extant by March-end companies.
- We are experimenting with new ways of displaying data/analytics for buybacks in Japan. To that end, we have a new tool. We hope users find it useful. We invite feedback.
[Japan M&A/Activism] Toyota Industries (6201) Deal Could Be Announced Near-Term
- Friday 25 April, Toyota Industries (6201 JP) released earnings for last year, guidance for this year and a Bloomberg scoop suggested Toyota Motors chairman Akio TOYODA would launch an MBO.
- In some ways surprising, but activists/”noisy shareholders” and TSE guidance on dual listings caused pressure, and Toyota Motors was trying to walk the good governance walk.
- I discussed the situation here on Day 1, and here a few days later. Long-only shareholders sold. Today, Kyodo had a follow-up article. Then Nikkei. Looks more solid now.
HSCEI Index Rebalance: Why Did Pop Mart (9992 HK) Miss?
- We had Pop Mart International (9992 HK) at the cusp of index inclusion. An increase in Postal Savings Bank of China (1658 HK)‘s FAF led to Pop Mart missing out.
- Estimated one-way turnover at the rebalance is 3.18% leading to a round-trip trade of HK$3.8bn (US$489m).
- There are large inflows for NetEase (9999 HK), Trip.com Group (9961 HK) and Baidu (9888 HK) due to a FAF methodology change for Secondary Listings.
Hang Seng Index (HSI) Rebalance: Midea (300 HK) & ZTO Express (2057 HK) Added; Inching Towards a 100
- Midea Group (300 HK) and ZTO Express Cayman (2057 HK) will be added to the Hang Seng Index (HSI INDEX) in June to take us up to 85 index constituents.
- Estimated one-way turnover is 2.9% and the estimated round-trip trade is HK$11.3bn (US$1.44bn) with over 1x ADV to trade in the adds and in one stock with a FAF increase.
- There could be a short-term drop in the AH premium for Midea Group while this inclusion ensures ZTO Express Cayman is a member of all major indices where eligible.
Toyota Industries (6201 JP): A Potential Privatisation Sooner than Expected
- Kyodo news agency reported that Toyota Industries (6201 JP) plans to accept a tender offer by Toyota Motor (7203 JP) and Toyota Chairman Akio Toyoda, potentially in May or June.
- The Nikkei reported that Toyota plans to borrow JPY3 trillion to fund the acquisition. These articles provide more clarity on price, composition of the offeror, financing structure, and timeline.
- These articles increase the probability of a tender offer around JPY18,515 (JPY6 trillion market cap). At the last close, the gross spread was 12.1%.
[Japan M&A] Mitsubishi Logisnext (7105) – The Deal Still Looks Mighty Good
- On 9 May Mitsubishi Logisnext Co., Ltd. (7105 JP) delayed earnings by 30 minutes. Shares popped. Then earnings were released, no deal, and shares crashed. Now they are rebounding.
- But they remain volatile and subject to dips like the one this AM -5% at one point. Fears may be due to the idea that first smoke here was Dec-2024.
- 5 months later, no deal yet. Bids were due pre-earnings but with tariffs and writedowns, one wonders if bidders were waiting for results.
GMO Internet Placement: Extremely Overvalued at the Moment
- GMO Internet Group (9449 JP) is looking to sell its 33.4% stake in its subsidiary GMO Internet (4784 JP) to meet free-float requirements.
- Shares are very overvalued at the moment and should be worth a mere fraction of its current trading value.
- We have looked at the company’s deal dynamics in our earlier notes. In this note, we discuss the firm’s outlook as well as valuation.
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